What you Need to Know if You’re in the Market for a Home
As the economy continues rebounding from the initial shock of the coronavirus pandemic and shutdowns, the summer housing market is heating up – and setting records.
According to the National Association of Realtors, sales of existing homes jumped nearly 21% in June compared to the previous month; the largest monthly gain since the organization began tracking data in 1968. While overall sales are still lagging in 2020, the upturn will no doubt have impact on prospective homebuyers.
Purchasing a new home is one of the most important financial decisions anyone will make – especially in an economic environment like this. That’s why it’s important to arm yourself with as much knowledge as possible.
If you’re in the market for a new home, here are the five top tips to help you in your journey.
Check your credit score: Your credit score rates your creditworthiness and is an important part of your financial picture. A good credit score puts you in a better position to get approved for a mortgage and to get a better interest rate on the loan. Checking your credit report and correcting any inaccuracies is important. Obtain a free copy of your credit report by visiting annualcreditreport.com or calling 877.322.8228.
Figure out your budget: Take a look at your income and your savings to set a realistic price range of houses that you can afford. Lenders typically look at two financial ratios. The housing expense ratio (the percentage of your gross monthly income that is spent on housing costs) should not exceed 28 percent. And the total obligations ratio (the percentage of household income required to repay debts, such as student loans, installment loans, or ongoing credit card balances) should not exceed 36 percent.
Research your mortgage options: A mortgage is a particular type of loan, and each mortgage is a different product with different requirements and pros and cons for various buyers. At Penn Community Bank, we offer fixed-rate mortgages, adjustable-rate mortgages, and bi-weekly mortgages.. In rural or suburban areas, we can help qualified buyers with a zero-down-payment home loan from the U.S. Department of Agriculture. We also offer FHA loans that require as little as 3.5 percent down, and we also participate in a great program called First Front Door, which offers grants to qualified first-time home buyers to reduce the amount needed for a down payment and closing costs.
Make a homebuying plan: Once you have a good idea of what you’re looking for and what your financial picture is, it’s time to make a plan to overcome any hurdles on your path to homeownership. If your credit score needs to be improved, we can connect you to credit counseling programs that will help you clean up problem areas. If you need to save more for a down payment, review your budget and identify how much more you would need to save.
Give us a call: It’s never too soon to talk to an expert. The mortgage loan officers at Penn Community Bank have more than 150 collective years of experience helping local families buy their perfect home.